Definitions
The term "public-private partnership" carries a
specific meaning in the Canadian context. First, it relates to the
provision of public services or public infrastructure. Second, it
necessitates the transfer of risk between partners. Arrangements
that do not include these two concepts are not technically "public-private
partnerships" and do not fall within the scope of the work
being done by CCPPP.
The definition embraced by The Canadian Council for
Public-Private Partnerships is as follows:
A cooperative venture between the public and private sectors,
built on the expertise of each partner, that best meets clearly
defined public needs through the appropriate allocation of
resources, risks and rewards.
Public-private partnerships span a spectrum of models that
progressively engage the expertise or capital of the private sector.
At one end, there is straight contracting out as an alternative to
traditionally delivered public services. At the other end, there are
arrangements that are publicly administered but within a framework
that allows for private finance, design, building, operation and
possibly temporary ownership of an asset.
The term "privatization" is used in the case of full
divestiture or when a specific function is turned over to the
private sector and regulatory control remains a public sector
responsibility. Unlike our American counterparts who tend to use the
words "privatization" and "public-private
partnerships" interchangeably, in Canada
"privatization" refers to the furthest point on the
PPP spectrum, where most or all assets are held by the private
sector. This Canadian definition more closely resembles the
terminology used in countries other than the USA.
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The following terms are commonly used to describe partnership
agreements in Canada, although this should not be considered a
definitive or complete listing:
Design-Build (DB): The private sector designs and builds
infrastructure to meet public sector performance specifications,
often for a fixed price, so the risk of cost overruns is transferred
to the private sector. (Many do not consider DB's to be within the
spectrum of PPP's).
Operation & Maintenance Contract (O & M): A
private operator, under contract, operates a publicly-owned asset
for a specified term. Ownership of the asset remains with the public
entity. Design-Build-Finance-Operate (DBFO): The private sector
designs, finances and constructs a new facility under a long-term
lease, and operates the facility during the term of the lease. The
private partner transfers the new facility to the public sector at
the end of the lease term.
Build-Own-Operate (BOO): The private sector finances,
builds, owns and operates a facility or service in perpetuity. The
public constraints are stated in the original agreement and through
on-going regulatory authority.
Build-Own-Operate-Transfer (BOOT): A private entity
receives a franchise to finance, design, build and operate a
facility (and to charge user fees) for a specified period, after
which ownership is transferred back to the public sector.
Buy-Build-Operate (BBO): Transfer of a public asset to a
private or quasi-public entity usually under contract that the
assets are to be upgraded and operated for a specified period of
time. Public control is exercised through the contract at the time
of transfer.
Operation License: A private operator receives a license
or rights to operate a public service, usually for a specified term.
This is often used in IT projects.
Finance Only: A private entity, usually a financial
services company, funds a project directly or uses various
mechanisms such as a long-term lease or bond issue.
Other terms used in the PPP field:
RFEI: Request for Expressions of Interest
RFQ: Request for Qualifications
RFP: Request for Proposals
back to top Scale of Public-Private Partnerships
The options available for delivery of public infrastructure range from
design-build to outright
privatization, where the government transfers all responsibilities,
risks and rewards for service delivery to the private sector. Within
this spectrum, public-private partnerships can be categorized based
on the extent of public and private sector involvement and the
degree of risk allocation. A simplified spectrum of public-private
partnership models used in Canada follows:
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